I am not sure about the difference between "Kernel" and "Application", but I was able to gather the following information:
Adding the "Kernel" extension to PacletInfo.m allows the paclet to provide a package that is loadable with Needs. (I have not tried if "Application" works too).
In order for this to work, it seems to be necessary to set the Context and Root arguments, like so:
Paclet[
Name -> "MyPack",
Version -> "0.0.1",
MathematicaVersion -> "10.0+",
Description -> "My Mathematica Application",
Creator -> "John Johnson",
Extensions ->
{
{"Kernel", Root -> ".", Context -> "MyPack`"}
}
]
That context we give will be translated into the appropriate directory (I believe through the use of Root) by FindFile. Now FindFile["MyPack`"] will resolve to wherever the paclet is installed.
Setting these also has the effect that if your package provides documentation (through the "Documentation" extension in PacletInfo.m), then the symbol usage messages will get a little >> at the end. Clicking this will open their documentation page.